Through its partnership with Alstom, BrightSource Energy is looking to become an international player by bidding on projects across the globe.
BrightSource Energy, Inc. has filed a Form S-1 with the Securities and Exchange Commission (SEC) in connection with a proposed initial public offering (IPO) of shares of its common stock. The terms of the offering are to be determined.
Goldman, Sachs & Co., Citi and Deutsche Bank Securities act as book-running managers for the offering. Orrick, Herrington & Sutcliffe LLP and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal counsel for BrightSource and the underwriters respectively.
Oakland, California based BrightSource is a leading solar thermal technology company that designs, develops and sells proprietary systems, using its proprietary solar power tower technology. BrightSource has executed 14 long-term power purchase agreements (PPAs) to deliver approximately 2.6 GW of installed capacity to two of the largest electric utilities in the United States, Pacific Gas and Electric Company (PG&E), and Southern California Edison (SCE).
Since its inception in 2004, BrightSource has raised over US $530 million (all figures in US dollar) in equity financing. Major shareholder/investors include VantagePoint Capital Partners, ALSTOM Power Inc., Morgan Stanley BrightSource LLC, Los Angeles Advisory Services Incorporated, and Draper Fisher Jurvetson, who collectively control approximately 67% of 94,317,072 outstanding shares of BrightSource immediately prior to the completing of the IPO.
ALSTOM Power of France and Switzerland invested close to $130 million in BrightSource for a 17.8% stake. ALSTOM became a strategic investor in May 2010 after leading a $173 million Series D financing. In August 2010, BrightSource signed a multi-year business partnership agreement with Alstom to jointly market and bid on projects to design and construct solar thermal power plants in Northern Africa, South Africa and Southern Europe.
Earlier this month, Google invested $168 million into BrightSource’s flagship project, the Ivanpah solar farm. The 392-megawatt solar thermal plant, estimated to be the world’s largest when complete, is expected to cost $2.18 billion to construct. Besides Google’s financial backing, NRG has committed $300 million to the project, while the U.S. government, through the Department of Energy Loan Guarantee Program will provide $1.6 billion in loans.
According to its IPO filing, BrightSource has more than 110,000 acres of land on which it wants to develop solar thermal systems. Beyond Ivanpah, the company has two other projects in advanced staged development in California — Rio Mesa Solar and Hidden Hills Ranch. In conjunction with these developments, 14 power-purchase agreements have been signed with two of the country’s largest utilities, Pacific Gas & Electric and Southern California Edison. Through these contracts BrightSource will send 2.6 gigawatts of electricity to Californian homes. Three of the PPAs are related to Ivanpah.
Despite the exciting prospects of BrightSource, there are still some risk factors to consider. For example, the company has yet to turn a profit, does not expect to have its books in the black any time soon, and has incurred significant financial losses. Last year, the company lost $71.6 million while generating only $13.5 million worth of revenue.
In its IPO filing, BrightSource states, "We have generated substantial net losses and negative operating cash flows since our inception and expect to continue to do so for the foreseeable future as part of the development and construction of solar thermal energy projects using our systems."
Another risk facing investors is that BrightSource has yet to implement its technology on a large-scale. Ivanpah will be the first project, and the company is acutely aware that due to its limited history, its technology may not perform at expected levels. Even more, since the company has yet to ever construct a utility-scale solar project, the building costs may run over-budget. Roughly $68 million has been placed in reserve for additional construction costs.
Finally, BrightSource has two legal battles that may undermine the Ivanpah project as well as its business as a whole. First, the Ivanpah project faces a lawsuit filed against the U.S. Department of Interior by the Western Watersheds Project. The lawsuit alleges the permitting of Ivanpah did not comply with requirements under several federal statutes, including the Endangered Species Act. In particular, the Western Watersheds Project is worried about the effect the project will have on the imperiled desert tortoise. Similar lawsuits have been filed against other solar projects.
Ivanpah also faces another lawsuit filed by the Native American cultural protection group, La Cuna de Aztlan Sacred Sites Protection Circle, which claims the project’s permitting did not adhere to the Federal Land Policy Management Act, the National Historic Preservation Act, and the Native American Graves Protection and Repatriation Act.
Nevertheless, BrightSource estimates its current technology and land-holdings have the potential to generate $4 billion in revenue. Additionally, through its partnership with Alstom, the company is looking to become an international player by bidding on projects across the globe. In its filing BrightSource, noted that in March it bid on a 110 MW solar thermal project in Israel.